GREENLIGHT CAPITAL RE LTD

The table below summarizes our consolidated operating results for the three and six months ended June 30, 2024 and 2023:

1 The net financial impact associated with changes in the estimate of losses incurred in prior years, which incorporates earned reinstatement premiums assumed and ceded, adjustments to assumed and ceded acquisition costs, and deposit interest income and expense, was a loss of $0.4 million and $1.9 million for the three months ended June 30, 2024 and 2023, respectively, and a loss of $5.8 million and $13.9 million for the six months ended June 30, 2024 and 2023, respectively.

2 Net underwriting income is a non-GAAP financial measure. See “Key Financial Measures and Non-GAAP Measures” above for discussion and reconciliation of non-GAAP financial measures.

The following provides further details on the significant variances for Q2 2024 compared to same quarter in 2023 (“Q2 2023”) and for the six months ended June 30, 2024 (“YTD 2024”) compared to the same period in 2023 (“YTD 2023”).

Overview

Three months ended June 30, 2024

Fully diluted book value per share increased by $0.26 per share, or 1.5%, to $17.65 per share from $17.39 per share at March 31, 2024. Basic book value per share increased by $0.27 per share, or 1.5%, to $17.95 per share from $17.68 per share at March 31, 2024.

Net income was $8.0 million for Q2 2024, compared to net income of $49.9 million reported for Q2 2023.

The developments that most significantly affected our financial performance during Q2 2024, compared to Q2 2023, are summarized below:

•Underwriting income: Decreased by $5.1 million primarily driven by 3.6 percentage points increase in our combined ratio, predominantly due to higher acquisition costs relating to our FAL business, partially offset by improved loss ratio and underwriting expense ratio. While total CAT losses were higher than in Q2 2023, this was offset by improved attritional loss ratio for our underwriting portfolio during the quarter. Current year CAT losses contributed 8.4% to our combined ratio, compared to 7.3% in Q2 2023. For further information on CAT losses and prior year loss development, refer to Note 7 -Loss and Loss Adjustment Expense Reserves of the Q2 2024 Financials.

•Investment income: Decreased by $29.6 million primarily driven by lower income from Solasglas. Our investment in Solasglas reported a gain of $4.3 million during Q2 2024, compared to a gain of $32.8 million during Q2 2023. Solasglas generated a net return of 1.2% for Q2 2024 compared to a net return of 10.9% for Q2 2023; and

•Foreign exchange gains (losses): $0.9 million foreign exchange losses for Q2 2024, compared to $4.7 million foreign exchange gains in Q2 2023, driven mainly by the strengthening of the pound sterling against the U.S. dollar in Q2 2023 whereby there was no significant movement in Q2 2024.

Six months ended June 30, 2024

Fully diluted book value per share increased by $0.91 per share, or 5.4%, to $17.65 per share from $16.74 per share at December 31, 2023. Basic book value per share increased by $1.08 per share, or 6.4%, to $17.95 per share from 16.87 per share at December 31, 2023.

Net income was $35.0 million for YTD 2024, compared to net income of $55.7 million reported for YTD 2023.

The developments that most significantly affected our financial performance during YTD 2024, compared to YTD 2023, are summarized below:

•Underwriting income: Decreased by $2.1 million primarily driven by 0.9 percentage points increase in our combined ratio mainly due to an increase in acquisition costs (same reason as Q2 2024) and an increase in underwriting expenses. While current year CAT losses contributed 8.0 percentage points to our combined ratio, compared to 5.8 percentage points for YTD 2023, the increase was offset by an improved attritional loss ratio for our underwriting portfolio. For further information on CAT losses and prior year loss development, refer to Note 7 -Loss and Loss Adjustment Expense Reserves of the Q2 2024 Financials.

•Investment income: Decreased by $8.4 million primarily driven by lower income from Solasglas. Our investment in Solasglas reported a gain of $22.6 million during YTD 2024, compared to a gain of $29.6 million during the equivalent period in 2023. Solasglas generated a net return of 6.4% for YTD 2024 compared to a net return of 9.7% for YTD 2023 .

•Corporate expense: Decreased by $1.5 million mainly due to non-recurring severance costs included in YTD 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.

•Foreign exchange gains (losses): $2.6 million foreign exchange losses for YTD 2024, compared to $9.7 million foreign exchange gains for YTD 2023, driven mainly by the reversal of the pound sterling movement against the U.S. dollar; and

•Other income, net: Increased by $2.7 million due to stronger investment income generated on funds withheld by third party Lloyd’s syndicates, reported on a quarterly lag basis.

Underwriting Results by Segment

The following provides a further discussion of our underwriting results for our Property & Casualty (Re)insurance operating segment for the three and six months ended June 30, 2024 and 2023.

Gross Premiums Written

Details of gross premiums written are provided in the following table:

As a result of our underwriting philosophy, the total premiums we write and the mix of premiums between property, casualty, and other business, may vary significantly from period to period depending on the market opportunities we identify.

Our Q2 2024 gross premiums written increased by $14.0 million, or 9.1%, compared to the equivalent 2023 period.

The following table provides a further analysis of this overall increase:

Our YTD 2024 gross premiums written increased by $44.8 million, or 13.1%, compared to the equivalent 2023 period.

The following table provides a further analysis of this overall increase:

Premiums Ceded

For Q2 2024, premiums ceded were $14.8 million, or 8.8% of gross premiums written, compared to $9.7 million, or 6.3% of gross premiums written, for the same quarter in 2023. For YTD 2024, premiums ceded were $38.0 million, or 9.8% of gross premiums written, compared to $21.0 million, or 6.1% of gross premiums written, for YTD 2023.

The increase in both periods was primarily due to the purchase of an additional retrocessional coverage to manage our overall exposure to Marine and Energy class in light of recent growth in this class of business and to reinstate certain retro excess of loss treaties in which the full coverage was presumed exhausted primarily from the Baltimore bridge loss event. Additionally, we had an increase in quota share retrocessions for Other Specialty business due to growth from inward premiums.

Net Premiums Written

Details of net premiums written are provided in the following table:

For Q2 2024 and YTD 2024, net premiums written increased by $8.9 million, or 6.2%, and $27.8 million or 8.7%, respectively, compared to the same periods in 2023. The movement in net premiums written resulted from the changes in gross premiums written and ceded during the periods as previously noted.

Net Premiums Earned

Details of net premiums earned are provided in the following table:

Net premiums earned for Q2 2024 and YTD 2024, increased by $18.5 million or 13.2%, and by $37.3 million or 13.2%, respectively, compared to the same periods in 2023. The change in net premiums earned is primarily a function of the amount and timing of net premiums written during the current and prior periods, coupled with the mix of business written in the form of excess of loss versus proportional contracts. For Q2 2024 and YTD 2024, excess of loss treaties accounted for 16% and 15% of the total net premiums earned, respectively, compared to 14% and 13% for Q2 2023 and YTD 2023, respectively.

Loss and LAE Incurred, Net

The components of the loss ratio were as follows:

For Q2 2024 and YTD 2024, our total loss ratio improved by 0.3 and 0.2 percentage points, respectively, compared to the same periods in 2023.

Current accident year loss ratio increased by 1.4 percentage points for Q2 2024, compared to the same quarter in 2023 driven mainly by 1.3 points increase in CAT losses. This increase was driven predominantly by the severe U.S. tornados (including convective storms).

Current accident year loss ratio increased by 3.2 percentage points for YTD 2024, compared to the same period in 2023, driven by 2.2 points increase in CAT loss events, mainly due to the Baltimore bridge loss and the severe U.S. tornados. While we have not renewed a U.S. homeowners’ property program in 2024, we wrote and earned premiums from the 2023 quota share treaty during 2024.

For the current quarter, we had prior year favorable loss development of 0.4%, compared to adverse loss development of 1.3% for the same quarter in 2023. For YTD 2024, our prior year adverse loss development improved by 3.4 percentage points compared to the same period in 2023. Refer to Note 7 for further details on prior year loss development.

Details of net losses incurred by line of business are provided in the following table:

The below table summarizes the loss ratios by line of business:

The following provides further details on the change in Q2 2024 vs. Q2 2023.

The following provides further details on the change in YTD 2024 vs. YTD 2023.

Acquisition Costs, Net

For Q2 2024 and YTD 2024, our total acquisition costs increased by 31.8% to $50.5 million, and by 15.4% to $92.1 million, respectively, compared to the same periods in 2023, mainly due to growth in net premiums earned and higher commissions, predominantly in our Casualty and Other lines of business. The acquisition cost ratios by line of business were as follows:

The following provides further details on the change in Q2 2024 vs. Q2 2023.

The following provides further details on the change in YTD 2024 vs. YTD 2023.

Ratio Analysis

The following table provides our underwriting ratios by line of business for the respective periods:

Our combined ratio increased by 3.6 percentage points for the current quarter compared to Q2 2023 predominantly due to higher acquisition cost ratio; partially offset by a decrease in loss ratio and underwriting expense ratio. The underwriting expense ratio improved as a result of higher volume of net premium earned to cover underwriting expenses and, to a lesser extent, a net gain from deposit-accounted contracts as a result of a favorable commutation during the quarter.

Our combined ratio increased by 0.9 percentage points for YTD 2024 compared to same period in 2023 predominantly due to higher acquisition cost ratio and underwriting expense ratio (see G&A Expenses below for further details); partially offset by a decrease in loss ratio.

General and Administrative (“G&A”) Expenses

The breakdown of our G&A expenses between underwriting and corporate functions was as follows:

G&A increased by 4.9% for Q2 2024, compared to Q2 2023. The increase was driven by:

•Underwriting expenses: Increased by $0.3 million or 6.3%, predominantly due to an increase in headcount to drive business growth, coupled with an increase in professional fees and outsourced services relating to underwriting activities. Further, Q2 2023 included a bad debt charge of $0.6 million, with no similar charge during Q2 2024.

•Corporate expenses: No significant change for the quarter.

G&A increased by 6.4% for YTD 2024, compared to same period in 2023. The increase was driven by:

•Underwriting expenses: Increased by $2.7 million or 29.2%, predominantly due to an increase in headcount to drive business growth, coupled with an increase in professional fees and outsourced services relating to underwriting activities. As a result, this contributed to the net increase in underwriting expense ratio in the YTD 2024 compared to the same period in 2023.

•Corporate expenses: Decreased by $1.5 million or 14.0%, driven mainly by non-recurring severance costs included in YTD 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.

Total Investment Income

A summary of our total investment income is as follows:

Net investment-related income

Our net investment-related income decreased by 8.2% compared to Q2 2023, and by 4.6% compared to YTD 2023, mainly driven by the decrease in interest income earned from restricted cash and cash equivalents as a result of decreases in the outstanding collateral balance during both periods.

Share of Solasglas’ net income

For Q2 2024 and YTD 2024, Solasglas reported a gain of 1.2% and 6.4%, respectively, compared to a gain of 10.9% and 9.7% for Q2 2023 and YTD 2023, respectively. The following table provides a breakdown of the gross and net investment return for Solasglas.

1 “Other income and expenses” excludes performance compensation but includes management fees. “Net investment return” incorporates both of these amounts. For further information about management fees and performance compensation, refer to Note 3.

For Q2 2024, the significant contributors to Solasglas’ investment return were long positions in Solvay (Belgium: SOLB), HP (HPQ), and Kyndryl Holdings (KD). The largest detractors were long positions in Brighthouse Financial (BHF), Green Brick Partners (GRBK), and a single-name short position.

For YTD 2024, the significant contributors to Solasglas’ investment return were long positions in GRBK, gold, and Tenet Healthcare (THC). The largest detractors were a long position in BHF and two single-name short positions.

Each month, we post on our website (www.greenlightre.com) the returns from our investment in Solasglas.